Analysis: UK electricity generation in 2018 falls to lowest level since 1994

§ Falling generation

Some 335TWh of electricity was generated in the UK in 2018, Carbon Brief analysis shows.

The last time UK generation was this low was in 1994, when Nelson Mandela became South African president and the apartheid era officially ended. That year also saw Tony Blair become leader of the opposition UK Labour Party, US president Bill Clinton deliver his first State of the Union address and Finland and Sweden voting to join the European Union.

The history of UK electricity generation since 1920 is charted in the graph below (blue line). Generation rose throughout the 20th century, barring the 1974 three-day week and the recession and miners’ strikes of the early 1980s. It then levelled off in the early 2000s and has been declining since 2005, including before, during and after the 2008 financial crisis.

Generation in 2018 was some 63TWh (16%) lower than in 2005, a reduction equivalent to 2.5 times the output of the new nuclear plant being built at Hinkley Point in Somerset. This is despite the UK population increasing by 10% from 60 million to 66 million people.

If per-capita electricity generation had remained at 2005 levels then the UK total in 2018 would have reached 439TWh (dashed yellow line in the chart, above). This means the UK has saved 103TWh relative to constant per-capita generation, equivalent to four times the output of Hinkley C.

Overall, the amount of electricity generated per person in the UK has fallen by 24% since 2005, down to its lowest level since 1984 (34 years).

§ Growing economy

The UK trend since 2005 breaks with the economic orthodoxy that a growing economy must be fuelled by rising electricity use. Instead, the economy has continued to grow even as electricity generation has levelled off and then started to decline, as the chart below shows.

The yellow line shows changes in UK real GDP (economic output adjusted for inflation) relative to its level in 1980, since when the economy has expanded more than two-fold. Generation – shown in blue and also relative to 1980 – had grown some 40% by 2005, but is now up less than 20%.

The reasons for this decoupling are not fully understood. There are several known contributory factors to the decline in UK electricity generation and demand since 2005. They include product energy efficiency regulations, energy-efficient lighting, environmentally conscious consumers and economic restructuring, including offshoring of energy-intensive industries.

For example, low-energy lightbulbs can cut electricity use by up to 90% while newer “white goods” such as fridges, freezers and washing machines can use up to 75% less electricity each year than the oldest models. There is significant untapped potential to continue cutting electricity use by replacing old appliances at the end of their lives with the latest models, according to the Committee on Climate Change (CCC).

There will also have been some impact from rising electricity prices since 2003 in the face of rapidly increasing wholesale gas prices, economic hardship following the 2008 financial crisis and price increases due to the growing costs of government climate and social policies. [In contrast to rising electricity and gas prices, average UK energy bills have fallen overall since 2008.]

A similar, if less extreme version of the UK decoupling of GDP and electricity use has been taking place in many other developed countries as their economies shift away from energy-intensive industries towards services and high-value manufacturing. This includes the US, where electricity demand has been flat for a decade after more than half a century of uninterrupted growth.

Manufacturing accounted for 17% of the UK economy in 1990, but this fell to 11% by 2005, with services picking up the slack. Manufacturing has held steady at 10% of the UK economy in 2017. Moreover, UK manufacturing output has been growing steadily since the financial crisis.

This shift towards a service-led economy initially saw growing imports of goods and their associated CO2 emissions. However, the outsourcing of UK emissions stopped growing around 2007.

§ Fossil fuel decline

The sources of UK electricity have shifted dramatically towards cleaner sources as generation has declined, with low-carbon supplies making up a record 53% of the total in 2018.

This was mostly down to strong growth for wind, up 16% to 58TWh in 2018, as the chart below shows (green line and area). This is nearly 3.5 times as much as the 17TWh from coal (black).

The capacity of offshore windfarms nearly doubled over the course of 2018, with more set to open this year. Solar generation increased by 11%, reaching 13TWh in 2018 (yellow in the chart, above).

Biomass generation also increased by 13% in 2018 to 36TWh. This was due to the former coal plant at Lynemouth in Northumberland reopening to run on imported wood pellets and Drax in Yorkshire converting a fourth unit to burn the fuel.

The CCC recently recommended that the UK should “move away” from large-scale biomass burning over time. Subsidies for biomass burning at Drax, Lynemouth and other sites will come to an end in 2027.

Meanwhile, the combined share of UK electricity generation from fossil fuels fell to 46% in 2018, its lowest level ever, as the chart below shows (grey line). This was primarily due to another 25% fall in coal, scotching fears it could make a comeback this year after precipitous recent declines.

Coal plants continued to close in 2018 and remaining stations ran fewer hours, despite the fuel having been expected to be favoured by high gas prices this winter. The UK has pledged to phase out all its coal plants by 2025 at the latest.

Gas generation was down 4% in 2018 to 132TWh (blue line). It remains the single-largest source of generation in the UK, accounting for 39% of the total last year. Gas is expected to be overtaken by renewables in the early 2020s and must contribute no more than 25% of the total by 2030 if the UK is to meet its legally binding climate goals.

Nuclear generation fell 7% in 2018 to 65TWh after cracks were discovered at two of Hunterston’s reactors, keeping the site closed for an extended period. Nuclear is the single-largest source of low-carbon electricity in the UK, but is in decline as ageing reactors are being retired. Barring life extensions, all but one of the UK’s current nuclear plants will have closed by 2025.

§ Climate contributions

In total, UK renewable generation has increased by 95TWh since 2005 while savings in per-capita  generation over the same period avoided 103TWh of extra electricity being needed.

These contributions have each helped avoid around 40Mt of annual UK CO2 emissions, compared to generating equivalent amounts of power using gas. Without this dual contribution, UK CO2 emissions would have been some 20% higher than the 368MtCO2 seen in 2017. If the power had come from coal, emissions would have been nearly 50% higher (+180MtCO2).

Lowering electricity use is not an end in itself, given the useful services it provides. But energy efficiency and renewable energy are both key elements of most pathways to meeting UK and global climate goals.

Forthcoming Carbon Brief analysis, due to be published later this month, will show that reduced electricity use and the rise of renewables have been the two largest contributors to cutting CO2 emissions from the power sector in the UK since 1990. Coal-to-gas switching is the third-largest factor.

While continued reductions in UK electricity demand are likely in the short term, the CCC and others expect UK electricity demand to increase in the medium term, if climate goals are to be met.

This is because continued improvements in energy efficiency would be more than offset by increased demand from electric vehicles (EVs) and electric heat pumps. In effect, the UK would be electrifying part of the energy demand it currently meets using fossil gas and oil.

For example, the CCC’s central scenario to 2030 anticipates electricity demand of 365TWh, up around 8% on 2018 levels. This allows for 2m heat pumps and 20TWh for EVs. Demand from road transport could eventually reach more than double this level, if the whole UK fleet switches to EVs.

§ Generation and supply

The figures in this article and analysis are based on UK electricity generation. This is the amount of electricity produced at power plants within the UK’s borders. It includes generation at pumped hydro stations, even though these are net electricity users after accounting for what is needed to pump water to their uphill storage reservoirs.

These figures align with the widely reported numbers published by BEIS in its quarterly Energy Trends chapter 5. BEIS also publishes figures on the amount of electricity supplied to the UK grid after accounting for power used on site – for instance, to run nuclear plant cooling equipment or coal pulverisers. This includes electricity imported to the UK from overseas via interconnectors.

On this measure, the UK imported around 6% of its electricity supplies in 2018, Carbon Brief analysis shows. Most of the UK’s imported electricity comes from France, via the 2 gigawatt (GW) electricity interconnector between the two countries that opened in 1986.

The UK imported 4-6% of its power in the 1990s via this link. The share of imports in UK supplies halved during the 2000s before rising back to its current level of 6%. The UK also has a 1GW link to the Netherlands and a 0.5GW cable to Ireland. A 1GW link to Belgium is to open early this year.

After accounting for imports, the amount of electricity supplied in the UK in 2018 is about the same as that seen in 1995. UK electricity demand has fallen significantly since 2005, though the 47TWh reduction is slightly lower than the 65TWh fall in generation. This is because of increased imports.

A large number of new interconnectors are being developed and government projections suggest imported electricity could supply as much as a quarter of UK power by the mid-2020s.

Projections from the CCC assume net imports will average out to zero across each year in future. Instead, interconnectors would help to balance supply and demand between countries over shorter timescales, from minutes through to seasons.